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Tuesday, August 1, 2017

TEMPE, AZ – Passco Companies, LLC, a privately held
Calif.-based real estate company that specializes in the investment,
acquisition, development and management of commercial properties throughout the
U.S., along with its JV-partner, InSite Property Ventures, has sold Ovation at Tempe, a 270-unit
multifamily community in the Phoenix submarket of Tempe, Arizona for $36
million.

The JV partnership
initially acquired the asset for $25.85 million in 2014 and sold it for $36 million
three years later, according to Passco’s Founder and CEO, Bill Passo.

“We recognized that there
was a tremendous opportunity to create value and capitalize on the ongoing
growth throughout the Phoenix Metro, which is exactly what we did,” says Passo.

“When we initially acquired the property, the
region was in proven recovery with plenty of runway left for growth in terms of
both value and rents. In fact, rents in the Phoenix Metro have increased by 5.6
percent over the past year alone, which is attracting significant investor
interest to the region.”

Bill Passo

Passo explains that the
firm’s ability to recognize the deep value potential of this market early in
the recovery cycle allowed them to sell the asset for a premium price,
ultimately achieving a 170.5 percent return to investors.

During ownership, the JV
partnership implemented a series of interior and exterior improvements to the
apartment community including upgrading unit interiors, constructing additional
carports and enhancing the property’s exterior and community amenities.

“This was a strong
value-add opportunity for our firm,” says Belden
Brown, Senior Vice President and National Sales Manager at Passco Companies
who also notes that the firm is actively seeking value-add opportunities
throughout the U.S. “By renovating and updating the property, we were able to
optimize the asset and significantly drive value in a very short period of
time.”

Michael Sun, Founder of InSite Properties, LLC adds, “These
capital improvements also provided the opportunity to significantly increase
rental and ancillary income, as well as position the asset for long-term rent
appreciation. This made the property very attractive to investment groups,
allowing us to achieve an IRR of approximately 21-22 percent.”

Ovation at Tempe is a very
unique apartment community that features one- and two-bedroom apartment units,
as well as separate casitas and townhomes situated on approximately 16 acres.

Michael Sun

“The property has one of
the lowest unit densities in Tempe and is strategically located in close
proximity to retail, entertainment, employment hubs, and education centers,”
says Mark Forrester, Senior Managing
Director at commercial real estate firm Berkadia, which completed the sale on
behalf of the JV partnership, in addition to arranging the financing.

“Passco and InSite Property Ventures’
value-add strategy truly positioned the asset for long-term growth and filled a
void in the local market for high-quality Class A product.”

The property is located at
4502-4505 S. Hardy Drive in the city of Tempe, Arizona.

Boca Raton, FL – Meridian
Capital Group, America’s most active dealmaker, arranged $21.7 million in
ground-up construction financing for the development of the Avery Place at Pompano multifamily
property in Pompano Beach, FL, on behalf of the Meyers Group.

The three-year
construction loan, provided by a balance sheet lender, features a floating rate
of 3.50% over 30-day LIBOR, full-term interest-only payments and two one-year
extension options.

This transaction was negotiated by Meridian
Managing Director, Noam Kaminetzky,
who is based in Meridian’s Boca Raton, FL office and Senior Vice President, Sam Grunberger, who is based in
Meridian’s Iselin, NJ office.

Avery Place at Pompano,
located at 225 North Federal Highway, is situated in a prime location right off
of Federal Highway in Pompano Beach. The Meyers Group had the opportunity to
purchase the land adjacent to an existing parking garage that will provide
parking for future tenants.

Sam Grunberger

Upon completion, the
163,000 square foot property will be an eight-story class-A multifamily
property, with 145 luxury rental units and an attached garage.

Amenities will
include a multi-function room, billiards and media room, a fitness center
including a yoga room, lushly landscaped pool and garden area with grilling
stations, cabanas, a waterfall, and a fire pit.

“Despite construction
loans becoming increasingly more difficult to come by in this market, Meridian
was able to leverage its relationship with a balance sheet lender to secure
financing for this exceptional project,” said Mr. Kaminetzky.

“In collaboration between
Meridian’s Florida and New Jersey offices, we were able to successfully
facilitate the closing,” said Mr. Grunberger. “It was a pleasure and an honor
to work with The Meyers Group, a very prominent and successful developer and
operator of multifamily properties,” he added. “I look forward to seeing Avery
Place at Pompano completed, as I am confident that it will become a stunning
asset.”

The financing was arranged by George Smith
Partners Vice President Zachary Streit.

Built in 1926 by renowned
architects Arthur and Nina Zwebell,
Patio del Moro is a historically-designated and architecturally-significant
property that was once home to some of the most prominent celebrities in
Hollywood history, including Charlie
Chaplin, Paulette Goddard, Joan Fontaine, Humphrey Bogart, and Suzanne
Pleshette.

Patio del Mar

“This condo conversion is one of
the first to take place in West Hollywood since the Recession, a sign that
condos are making a comeback in Los Angeles,” explains Streit.

“The property’s historic
significance, coupled with its irreplaceable urban-infill location, presented
an attractive investment opportunity to capitalize on the demand for housing in
West Hollywood. This deal reflects a renewed investor interest in for-sale
residences, as well as strong lender appetite for condos in this market.”

Zachary Streit

The sponsor, Brian Friedman investing through his family office Friedman
Capital, is a private equity, venture capitalist, and commercial real estate
investor developer who has been involved in the conversion and sale of more
than 1,000 condominium units over the last 20 years.

He founded Friedman
Capital in 2008, and is also the founder and managing partner of Foxhall
Partners in Washington DC. Brian purchased this property with his older brother Jay, who has been a resident
of Hollywood for decades.

Upon acquisition, the
sponsor plans to renovate the property and apply for a Mills Act Tax Abatement,
which provides economic incentives for the restoration and preservation of
historic buildings by private owners.

“Despite this asset’s prime location and
unique investment potential, the challenge was getting lenders comfortable with
the sponsor’s conversion strategy,” notes Streit. “Given the property’s
historic landmark status and limited on-site parking, negotiating the condo
mapping and release provisions would be difficult and would require an
extensive set of approvals.”

Streit continues, “To
address and resolve these concerns, we focused on demonstrating the sponsor’s
proven track record of successful condo conversions and the pent-up demand for
residences in West Hollywood. Our ability to source an attractive bridge loan
to finance this deal is a testament to our market expertise, as well as the
strength of our capital relationships.”

Paulette Goddard

Located just one block
south of the Sunset Strip, in close proximity to a plethora of high-end
restaurants, retailers, and music venues, Patio del Moro is situated in the
heart of West Hollywood, a supply-constrained, high-demand Los Angeles
submarket.

In recent years, West
Hollywood has emerged as one of the most walkable, amenity-rich neighborhoods
in Los Angeles, according to Streit. Notable attractions include entertainment
venues such as the Roxy Theatre and The Troubadour; boutique hotels such as The
Standard; The Pacific Design Center; film, television, and music production
studios; and much more.

Brian Friedman

“West Hollywood is at the
epicenter of the ongoing cultural revitalization in Los Angeles, and truly
embodies the live/work/play lifestyle that today’s residents are demanding,”
says Brian Friedman, Founder of Friedman Capital family office and Managing
Partner of Foxhall Partners. “Patio del Moro’s proximity to nearby amenities,
coupled with its historic character and old Hollywood charm, makes it
well-positioned to cater to the demand for housing in this market.”

Designed in the Spanish
Revival courtyard style with distinct Moorish features, Patio del Moro offers
average unit sizes of 1,425 square feet, which are larger than average for this
submarket, and includes a mix of mostly two- and three-bedroom units.

George Smith Partners
secured the $4.5 million loan from a bank with a national lending platform.
Sized to 65% of cost, the bridge loan is interest only and floats at prime plus
0.5%.

The property is located at
8225-8237 Fountain Avenue in West Hollywood, California.